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Bovie Medical Reports Second Quarter 2014 Results

Bovie Medical (NYSE:BVX), a maker of medical devices and supplies and
the developer of J-Plasma®, a patented new surgical product, announced
results for the second quarter ended June 30, 2014.

Management Comment

"We continued to make significant progress in all aspects of the
business during the second quarter," said Robert L. Gershon, Chief
Executive Officer. "We achieved double-digit revenue growth, which drove
a 230 basis point increase in adjusted gross margin, demonstrating the
potential of our core business and providing important support for the
commercialization of our J-Plasma® product.

"Our core business grew 2.8% year-on-year, and we executed on our
strategy of adding new products to our portfolio with the announced
launch of Derm 101 and 102, for office-based practitioners. These Bovie
branded products represent the first new core product launches in
several years, and we see multiple opportunities to leverage our
significant brand equity to drive further revenue growth.

"The OEM business showed positive comparisons, increasing by a factor of
four over last year's second quarter, which was impacted by contract
expirations. This is a scalable business with additional profit
potential, and we plan to grow it judiciously so as to optimize our
resources to meet projected demand for both our core business products
and J-Plasma®.

"We continued to make progress on the commercialization of J-Plasma®. At
the end of the second quarter, J-Plasma® was in use at over 40 sites, up
from 25 sites at the end of the first quarter, and the number of
surgeons using the product increased to more than 60 from 40. Sales in
the second quarter reflected timing issues associated with sales cycles
for hospital based products as well as the continued build-up and
training of our sales team. We succeeded in capturing orders of over
$50,000 in July, and importantly, our surgeon pipeline continues to
expand, increasing to 98 from approximately 50 at the end of the first
quarter, and 12 at the end of 2013.

"In July, we were awarded an important contract with a mid-western
Integrated Delivery Network (IDN) that is consistently rated among the
top 10 systems by U.S. News & World Report. This is a complex contract
that will take some time to fully implement, but it gives us the
opportunity to sell J-Plasma® into each of the 13 hospitals that
comprise the system," noted Mr. Gershon.

Second Quarter 2014 Results

Second quarter sales were $6.9 million, a 14.9% increase over the $6.0
million reported in last year's second quarter. Sales of distributed and
branded products were $6.0 million, up 2.8% from the $5.8 million
reported for the second quarter of 2013. Sales of OEM products were
$961,000, significantly higher than the $223,000 of last year's second
quarter, reflecting higher demand from existing customers. Sales of
J-Plasma® were $15,000 for the period.

The Company incurred an inventory write-down of $843,000 in the second
quarter primarily related to the commercialization of J-Plasma® and
other legacy items in our Core business. As a result, gross profit was
$1.9 million compared to $2.2 million in the second quarter of 2013.
Adjusted gross margin, which excludes the impact of the write-down, was
39.2%; including the impact, gross margin was 27.0% compared to 36.9% in
the prior year. The operating loss in the second quarter was $1.7
million, essentially flat with the second quarter of 2013. The adjusted
operating loss, which excludes the previously-mentioned inventory
write-down and $383,000 related to CFO transition and other charges, was
$520,000 compared to an adjusted operating loss of $609,000 in the prior
year which excludes the $1.0 million impact of a legal award.

The Company recorded a non-cash gain of $1.5 million related to the
mark-to-market accounting for the fair value of issued common stock
purchase warrants. As a result, the Company reported net income for the
period of $251,000 with $29,000 attributable to common shareholders.
This translated into $0.00 per basic share and a loss of $0.07 per
diluted share of common stock compared to a net loss of $1.1 million, or
$0.06 per basic and diluted share of common stock in last year's second
quarter. Exclusive of this non-cash gain and other non-GAAP operating
charges in 2Q14 and the $1.0 million legal award in 2Q13,�the Company
would have reported a net loss of $0.03 per basic and diluted share of
common stock in line with the loss of $0.03 per basic and diluted share
of common stock from a year earlier.

Recent Development

Mr. John C. Andres, JD, was elected to the Bovie Board of Directors at
the Annual Meeting held on July 17, 2014. Mr. Andres has over 30 years
of experience in the medical device industry, specializing in
patent/business strategy development and execution. Most recently, he
was a partner of Hawk Healthcare, LLC and previously helped found K2M,
Inc. Prior to that, Mr. Andres held various legal and strategic
business development positions at the Surgical Division of Tyco
Healthcare Group, LLP, now Covidien, Plc and its predecessor, United
States Surgical Corporation.

Summary and Outlook

"This was another quarter of solid achievement for Bovie Medical. The
commercialization of J-Plasma® is proceeding on schedule, and we
continue to take advantage of growth opportunities within our core
business. Below is an update on some of our key objectives for 2014:

In line with the Company's objective to generate strong clinical data
and publications, Bovie announced the publication of the first two
independent white papers on J-Plasma®, authored by surgeons at a
women's health center in Nevada. The first paper tracks J-Plasma's®
effect on tissue compared to the effects of Argon, monopolar cautery,
and CO2 laser, and the second analyzes the versatility of the
J-Plasma® product's power settings. A third white paper, which is
scheduled for publication in the third quarter, will examine the pre-
and post-procedural results on facial wrinkles, and at least two more
white papers are scheduled to be published by the end of 2014. This
initiative is expected to greatly assist in the sell-in efforts with
Value Analysis Committees at hospital customers.

The Company has scheduled surgeon trainings in Portland, St. Louis,
Las Vegas and New York during the third quarter. As more surgeons
express interest in J-Plasma®, we will increase our training program
schedule to facilitate adoption of the technology.

Bovie's current sales force is comprised of five direct salespeople,
28 independent manufacturers' representatives and one clinical
specialist to drive adoption of the J-Plasma® device. In August, the
Company will conduct a 3-day intensive clinical and product training
seminar in Tampa that will include certification and will provide the
collateral materials needed to move forward with an efficient and
focused sales campaign.

The Derm 101 and 102 products began shipping at the end of July. These
efficient and economical high frequency desiccators will allow medical
practitioners including family physicians, pediatricians, general
dermatologists and nurse practitioners to perform minor skin
procedures.

To increase awareness of Bovie Medical and J-Plasma®, the Company has
launched a new branding and marketing campaign, which includes new
print advertisements and sales materials as well as videos on the
Company's website of actual procedures using J-Plasma®. In addition,
Bovie will be redesigning its website.

"We are entering the second half of 2014 with positive momentum.
J-Plasma® is gaining recognition by an increasing number of surgeons in
our initial targeted markets of gynecology, dermatology and plastic
surgery, and we have been able to attract top-notch sales talent to
execute its broader roll-out. Thus, we expect to see progressive
improvement in the second half of 2014 across the key metrics that
relate to the J-Plasma® ramp, with the major positive financial impact
to begin in 2015. At the same time, we are developing strategies to
leverage our market leadership in electrosurgical products to capture
additional profitable revenue growth," concluded Mr. Gershon.

Use of non-GAAP financial measures

In this press announcement, management has disclosed financial
measurements that present financial information not in accordance with
Generally Accepted Accounting Principles (GAAP). These measurements are
not a substitute for GAAP measurements, although company management uses
these measurements as aids in monitoring the company's ongoing financial
performance from quarter to quarter and year to year on a regular basis
and for benchmarking against other medical technology
companies.�Adjusted non-GAAP income from operations, adjusted non-GAAP
net income and adjusted non-GAAP income per diluted share measure the
income from operations, net income and income per diluted share of the
company excluding unusual items. Management uses and presents these
measures because management believes that such adjustments facilitate an
understanding of the financial impact of unusual items on the company's
short- and long-term financial trends. Management also uses adjusted
non-GAAP items to forecast and to evaluate the operational performance
of the company, as well as to compare results of current periods to
prior periods on a consistent basis.

Non-GAAP financial measures used by the company may be calculated
differently from, and therefore may not be comparable to,
similarly-titled measures used by other companies.�Investors should
consider non-GAAP measures in addition to, and not as a substitute for,
or superior to, financial performance measures prepared in accordance
with GAAP.

Please refer to the attached reconciliation between GAAP and non-GAAP
financial measures.

Conference Call

Bovie Medical will host a conference call on Tuesday, August 5th, at
4:30 pm Eastern Time to discuss first quarter results and latest
corporate developments. To listen to the call by phone, interested
parties within the U.S. should call 1-877-317-6789. International
callers should call 1-412-317-6789. All callers should ask for the Bovie
Medical Corporation conference call. The conference call will also be
available through a live webcast at Bovie Medical Corporation's website
or at http://services.choruscall.com/links/bvx140805.html.
A replay of the call will be available approximately one hour after the
end of the call through September 5, 2014. The replay will be available
via Bovie Medical Corporation's website.

About Bovie Medical Corporation

Bovie Medical Corporation is a leading maker of medical devices and
supplies as well as the developer of J-Plasma®, a patented new
plasma-based surgical product for cutting and coagulation. J-Plasma®
utilizes a helium ionization process to produce a stable, focused beam
of ionized gas that provides surgeons with greater precision, minimal
invasiveness and an absence of conductive currents through the patient
during surgery. Bovie Medical Corporation is also a leader in the
manufacture of a range of electrosurgical products and technologies,
marketed through both private labels and the Company's own
well-respected brands (Bovie®, Aaron®, IDS™ and ICON™) to distributors
worldwide. The Company also leverages its expertise through original
equipment manufacturing (OEM) agreements with other medical device
manufacturers. For further information about the Company's current and
new products, please refer to the Investor Relations section of Bovie
Medical Corporation's website www.boviemed.com.

Cautionary Statement on Forward-Looking Statements

Certain matters discussed in this release and oral statements made from
time to time by representatives of the Company may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 and the Federal securities laws. Although
the Company believes that the expectations reflected in such
forward-looking statements are based upon reasonable assumptions, it can
give no assurance that its expectations will be achieved.

Forward-looking information is subject to certain risks, trends and
uncertainties that could cause actual results to differ materially from
those projected. Many of these factors are beyond the Company's ability
to control or predict. Important factors that may cause actual results
to differ materially and that could impact the Company and the
statements contained in this release can be found in the Company's
filings with the Securities and Exchange Commission including the
Company's Reports on Form 10-K/A for the year ended December�31, 2013.
For forward-looking statements in this release, the Company claims the
protection of the safe harbor for forward-looking statements contained
in the Private Securities Litigation Reform Act of 1995. The Company
assumes no obligation to update or supplement any forward-looking
statements whether as a result of new information, future events or
otherwise.

2 Excluding $843,000 inventory adjustment charge and $383,000
of expenses related to CFO transition and other charges in 2Q14 and $1.0
million legal award in 2Q13; see page 4 for additional disclosure

�

Bovie Medical Corporation

Condensed Consolidated Statements of Operations

For the Three and Six Months Ended June 30, 2014 and 2013

(UNAUDITED) (in thousands except per share data)

�

�

�

Three Months Ended

�

�

�

�

Six Months Ended

June 30,

June 30,

2014

�

2013

2014

�

2013

�

Sales

$

6,945

$

6,042

$

13,427

$

11,738

Cost of Sales

�

5,068

�

�

3,812

�

�

8,793

�

�

7,357

�

Gross Profit

1,877

2,230

4,634

4,381

27.0

%

36.9

%

34.5

%

37.3

%

Costs and Expenses:

Research & Development

318

314

651

647

Professional services

287

383

544

836

Salaries and related costs

1,419

999

2,326

1,818

Selling, General and Administrative

�

1,599

�

�

2,184

�

�

2,800

�

�

3,395

�

Total Expenses

3,623

3,880

6,321

6,696

52.2

%

64.2

%

47.1

%

57.0

%

�

Loss from operations

(1,746

)

(1,650

)

(1,687

)

(2,315

)

Interest (net of interest income)

(40

)

(60

)

(69

)

(116

)

Gain (loss) on change in fair value of derivative liabilities

�

1,454

�

�

37

�

�

(8,145

)

�

3

�

Pre-Tax loss

(332

)

(1,673

)

(9,901

)

(2,428

)

Benefit for income tax

�

583

�

�

554

�

�

545

�

�

899

�

Net Income/(loss)

251

(1,119

)

(9,356

)

(1,529

)

Accretion on convertible preferred stock

�

(222

)

�

-

�

�

(426

)

�

-

�

Net Income/(loss) attributable to common shareholders (Note 3)

�

29

�

�

(1,119

)

�

(9,782

)

�

(1,529

)

�

Income (loss) per share

Basic

$

0.00

($0.06

)

($0.55

)

($0.09

)

Diluted

$

(0.07

)

($0.06

)

($0.55

)

($0.09

)

�

�

�

�

Weighted average number of shares outstanding - basic

�

17,717

�

�

�

17,669

�

�

17,667

�

�

17,660

�

�

�

�

�

Weighted average number of shares outstanding - diluted

�

21,176

�

(Note 1)

�

17,669

�

�

17,667

�

(Note 2)

�

17,660

�

�

(Note 1) For the three months ended June 30, 2014, options
and warrants to purchase shares of common stock were included in the
computation of diluted earnings per share because their effects were
dilutive, while the conversion of Series A Preferred Stock into
3,500,000 shares of common stock were excluded from the computation of
diluted earnings per share as the effect is anti-dilutive.

(Note 2) For the six months ended June 30, 2014, options and
warrants to purchase shares of common stock and Series A Preferred Stock
were excluded in the computation of diluted earnings per share because
their effects were anti-dilutive.

(Note 3) Amounts reflected in the presentation of
calculations may be impacted by rounding.

�

Bovie Medical Corporation

Condensed Consolidated Balance Sheets

June 30, 2014 and December 31, 2013

(in thousands)

�

�

�

�

�

�

�

ASSETS

6/30/2014

12/31/2013

(unaudited)

Current assets:

Cash and cash equivalents

$5,575

$7,924

Restricted cash

898

-

Trade accounts receivable, net

2,617

1,990

Inventories, net

6,922

8,415

Current portion of deposits

1,235

948

Prepaid expenses

857

�

545

Total current assets

18,104

19,822

�

Property and equipment, net

6,863

7,063

�

Other assets:

Brand Name/Trademark

1,510

1,510

Purchased Technology (net)

485

575

Deferred tax Asset

3,961

3,412

Deposits, net of current portion

69

120

Other assets

607

674

�

�

�

Total Assets (Note 1)

$31,599

�

$33,176

�

(Note 1) Amounts reflected in the presentation of
calculations may be impacted by rounding.

Weighted average number of shares outstanding - basic and diluted (Note
2)

�

17,717

�

�

17,669

�

�

17,667

�

�

17,660

�

�

(Note 1) Amounts reflected in the presentation of EPS
calculations may be impacted by rounding.

(Note 2) For the three and six months ended June 30, 2014 and
2013, respectively, gains, losses and accretion were excluded from the
adjusted non-GAAP net income/(loss) as were the respective diluted
shares associated with those instruments for purposes of the EPS
calculation.

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